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Monday, June 17, 2024


Hope Rises For  Financial Autonomy of LG  Councils As Court Of Appeal Dismisses  36 States’  Appeal


… says the appeal by State governors was unmeritorious.


 Olushola Bello



The long-expected financial autonomy
of local government councils across the country, which has been a source of
controversy between the states and the  Federal Government may soon be


This is because the governments of
the 36 states have lost the battle of holding on to the funds of the local
government councils in an appeal they made against the Federal Government at
the  Court of Appeal in Abuja on Monday.


The Federal Government had made
efforts to monitor state governments’ handling of Local Governments’ funds
which the state governor has abused by denying them full access to the money.


The Court of Appeal, Abuja division,
in a judgment yesterday, affirmed the May 23, 2022 judgment of the Federal High
Court,  Abuja which declared lawful the Nigerian Financial Intelligence
Unit (NFIU) Guidelines, which came into effect on June 1, 2019.


The NFIU 2019 guidelines required
among others, that the States/Local Governments Joint Accounts should be used
only for receiving funds and subsequently transferring them to Local
Governments’ accounts only.


The NFIU claimed that the guidelines,
which also limit daily cash withdrawal from the State/LG joint account to
N500,000 are intended to reduce “crime vulnerabilities created by cash
withdrawal from local government funds throughout Nigeria effective from June
1, 2019.”


The court in a unanimous judgment of
a three-man panel led by Justice Hamman Barka held that the appeal by the 36
states, filed through their Attorneys General and the NGF was unmeritorious.


Justice Barka proceeded to dismiss
the appeal marked: CA/ABJ/CV/822/2022.


Listed as respondents in the appeal
are the Attorney General of the Federation (AGF), the NFIU and the Nigeria
Union of Local Government Employees (NULGE).


The appeal was against the May 23,
2022 judgment by Justice Inyang Ekwo of the Federal High Court, Abuja in the
suit, marked: FHC/ABJ/CS/563/2019 filed by the 36 states and the NGF.


They had among others, challenged the
legality of the Nigerian Financial Intelligence Unit (NFIU) Guidelines, which
came into effect on June 1, 2019.


The states and the NGF argued among
others, that the NFIU guidelines: known as “the NFIU Enforcement and Guidelines
to Reduce Crime Vulnerabilities Crafted by Cash Withdrawal from Local
Government Funds throughout Nigeria,” was unlawful.


They particularly contended that
provisions 1 to 6 of the NFIU Guidelines and the penalties prescribed are ultra
vires the power of the NFIU under Sections 3 (1) and 23(2) (a) of the Nigerian
Financial Intelligent Unit Act, 2018 and therefore unconstitutional.


Justice Ekwo had, in his judgment
dismissed the suit by the states and the NGF on the grounds that it was


The judge held that he was unable to
see where the NFIU Guidelines contradict the provisions of sections 7(1), (6)
(a) and (b) of the Constitution.


He added that the guidelines also did
not conflict with the provision of Section 162(6) of the Constitution, which
creates the State Joint Local Government Account, into which allocations to the
Local Government Councils of the state from the Federation Account and from the
government of the state are paid.


The judge held that the guidelines
did not contradict Section 162(8) of the constitution which prescribed that the
amount standing to the credit of the local government council of the state
shall be distributed among the local government councils of that state on such
terms and in such manner as may be prescribed by the House of Assembly of the


Justice Ekwo added that the
provisions of the NFIU guidelines also do not contradict the provisions of the
4th Schedule to the 1999 Constitution which prescribes the functions of a Local
Government Council.


He noted that the court’s duty is
limited to expounding the law and not expanding it.”


Justice Ekwo added: “On the whole, I
see the provisions of the guidelines of the 2nd defendant as seeking to direct
the monitoring of accounts, transfers and any other means of payment or
transfer of funds of local government councils as provided for in Section 3 (1)
(r) of the Act of the NFIU.


“It only limits cash withdrawal made
from any Local Government Account anywhere in the country to amount not
exceeding N500,000.00 (Five Hundred Thousand Naira) per day.


“Any amount higher than that can be
done using other methods of banking transaction save cash.


“Unless it can be shown that there is
any provision of the 1999 Constitution (as amended) which these provisions of
the 2nd defendant’s guidelines have contradicted or conflicted directly and
practically, then the issue of unconstitutionality cannot be said to arise.”


Justice Ekwo said he found that there
was no provision in the NFIU’s guidelines that has contravened the provisions
of Sections 7(1), (6) (a) and (b), 162 (6), (7) and (8), and the 4th Schedule
to the 1999 Constitution (as amended).


“I also find that the case of the
plaintiffs has not been established and I so hold.


“I find, in the end, that the case of
the plaintiffs lacks merit and ought to be dismissed and it is hereby
dismissed,” the judge said.

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